Unilever Plans to Commit to the Region for the Long Run

With 20 billion cups of tea coming each year from its Dubai factory, one of Unilever’s most senior executives has said that the company is not concerned by volatility in the region.

Despite acknowledging that the Middle East was experiencing its fair share of instability, Mark Engel, Unilever’s chief supply chain officer, said he was confident that the region could ride out such turbulence.

“Absolutely [it will], otherwise we wouldn’t be here,” Engel said. He added that if Unilever wasn’t confidence in the region, it would not have made the multibillion dirham commitment it did several years ago to increase its manufacturing base in the UAE.

“We sell in 190 countries, and so there’s always something going on. One of the key skills of Unilever is that we thrive in volatility and uncertainty,” Engel said.

He added that companies which took a long-term view, and committed to a market rather than oscillate between in and out, were more likely to succeed in such environments.

In the last few years, Unilever has invested billions of dirhams in its facilities across the Middle East. Most recently, it opened a Dh1 billion factory in Dubai to produce personal care products. In 2002, Unilever opened the largest tea packaging facility in the world in Jebel Ali.

Engel, who has been with the consumer giant since 1990, says the company is optimistic by the fundamentals it sees in the region.

“When you look at the population base, the age profile, the pricing power consumption, this is an attractive region, and it will remain an attractive region,” Engel said.

“There will be up and downs. One year, let’s say, you’ll have an issue with Qatar and the next year you’ll have an issue with Lebanon. But that’s the same in Latin America,” he added. “It doesn’t bother us.”

Fellow executive Yasir Jamal, Unilever’s VP of supply chain for the Middle East and North Africa (Mena), gave his outlook for the company’s operations in the region next year.

“With the volatile environment that we’re having in the region,” said Jamal, “we need to manage this dimension. We need to grow, deliver our agenda, and sustain our huge investment in the region. It will be a very busy year, but I’m optimistic we can deliver our targets.”

Both Engel and Jamal said that the company planned to shoulder the 5 per cent value added tax upon its introduction on January 1, 2018.

Whilst noting that there could be a shock to the market from the introduction of the tax, both Engel and Jamal noted that given it was a level playing field for all, they were not too concerned.

“The biggest challenge for us is organising our business internally in time,” Jamal said.